Question
Option #1: Computing and Recording Depreciation On June 1, a machine costing $660,000 with a 5-year life and an estimated $50,000 salvage value was purchased.
Option #1: Computing and Recording Depreciation
On June 1, a machine costing $660,000 with a 5-year life and an estimated $50,000 salvage value was purchased. It was also estimated that the machine would produce 200,000 units during its life. Actual production would be 40,000 units per year for all five years.
Using the depreciation template provided, determine the amount of depreciation expense for the third year under each of the following assumptions:
The company uses the straight-line method of depreciation.
The company uses the units-of-production method of depreciation.
The company uses the double-declining-balance method of depreciation.
Assuming straight line depreciation, prepare journal entry for the third year.
Assume the company sold the machine at the end of the fourth year for $100,000. Prepare a journal entry for asset disposal in the fourth year.
Assume you are the chief accountant of ABC Inc., a sheetrock manufacturer. Determine how you will choose, based on best industry practices, the depreciation method for ABC Inc. to use.
G H ACT300 Principles of Accoutning Module 6: Critical Thinking Template option 1 (Depeiation Template) Record journal entry for depreciation expense for the third year: $0 Cost Salvage value Depreciable cost Useful life Debit Credit $o Dec. 31 Depreciation Expense Accumulated Depreciation- Equipment To record annual depreciation 0 Useful life in units of production Record journal entry for asset disposal in the fourth year: Straight line method Cost - Salvage Value Useful life in ula Depreciable costCost Salvage Value Debit Credit Dec. 31 Cash Accumulated Depreciation Loss on disposal Equipment To record disposal of equipment 2Annual depreciation expense- Also, compute the straight line depreciation rate. The formula is 100% divided by the useful life in years Compute the straight line depreciation rate below Straight line depre ciation rate #DIV/0! reciation for the Period End of Period Depreciable Depreciation Depreciation Accumulated Book Depreciation Value Annual period Cost rate Expense 7 Year 8 Year 2 9 Year 3 0 Year4 1 Year 5 Cost of machine 4 Salvage value is not depreciated Straight-Linc Depreciation Units-of-Production Double-Declining BalanceStep by Step Solution
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